WTO agreement likely to produce few LDC winners

For months, Oxfam International; government officials in West Africa, Brazil and the European Union; and U.S. media outlets have argued that ending agricultural subsidies would lift farmers in developing countries out of poverty.

They've claimed the U.S. cotton program, specifically, and U.S. farm programs, in general, lead to increased production and lower commodity prices for all farmers, particularly those in the LDCs or least developed countries.

But what if all those Oxfam experts, government officials and New York Times and Wall Street Journal editorial writers are wrong? What if the developed countries dismantle their farm programs and, in the end, third world farmers are no better off than when the Doha Round started?

That's the premise of some recent articles that contend that “reforming” farm subsidies doesn't necessarily equate with improving the lives of the world's poorest farmers.

The clamoring from Oxfam and other non-governmental organizations would certainly lead the average person to believe that the end of subsidies will usher in a new age of agriculture, according to Eduardo Porter.

Typical of the rhetoric, he said, is this quote from Paul Wolfowitz, head of the World Bank and former deputy secretary of defense: “High tariffs keep them out of key markets, and tariffs and subsidies together drive down the world price of their exports. Without the income that trade could provide, it is their children who go hungry and who are deprived of clean water, medicines and other basic necessities of life.”

But is that really true? Porter cites a study by three University of California, Berkeley economists who say agricultural supports actually increased per capita income in two-thirds of 77 developing countries, including most of the poorest, such as Burundi and Zambia.

“Developing countries that are big agricultural exporters — including Brazil, Argentina, Indonesia, Thailand — are undoubtedly hurt by the farm subsidies,” said Porter. “But these countries are not among the poorest.”

Another study, from the University of California, Davis, said 105 of 148 developing countries, including 48 of the 63 poorest nations, imported more food than they sold. “Some very poor nations, like Guyana, are food exporters. Yet even for them, the end of subsidies and tariffs might prove counterproductive, because some of their farm products can already enter the industrialized nations duty free.”

In another article, John Dittrich says the improvements in income being touted by Oxfam and foreign governments border on the ludicrous.

“Do advocates for poor farmers such as Oxfam International seriously believe that a 1 percent to 10 percent increase in world commodity prices from their currently disastrously low levels will have any significant impact on poor farmers in developing countries?” he said. “Do U.S. trade negotiators believe that a 1 percent to 10 percent increases in farm prices will make up for the elimination of subsidies?”

If the 2007 farm bill is guided by recent and past WTO agreements, Dittrich believes there will be few winners in developing or industrialized countries such as the United States.